In a move aimed at further incentivizing domestic manufacturing, the Indian government is considering a significant tweak to its public procurement norms. The proposed change seeks to extend the benefits of deemed local supplier status to companies that outsource production to PLI scheme beneficiaries.
Currently, companies directly benefiting from the Production-Linked Incentive (PLI) schemes are already categorised as deemed Class-II local suppliers, a classification that relaxes local content requirements. However, the government is now exploring the possibility of extending this benefit to the original equipment manufacturers (OEMs) who contract out production to PLI beneficiaries.
A senior government official confirmed, “This issue has been raised, and we are seeking inputs on whether intellectual property and brand owners or their contract manufacturers should also receive local supplier benefits. The matter is under review.”
The Department for Promotion of Industry and Internal Trade (DPIIT) and the telecom department are actively discussing the implications of this proposed change. It’s anticipated that the government may consider relaxing the stringent Class-I and Class-II supplier criteria in certain sectors, particularly those where domestic value addition is gradually increasing.
India’s PLI schemes, covering 14 strategic sectors, have already attracted substantial investments and generated significant employment opportunities. With around 755 beneficiaries and over ₹1.5 lakh crore in incremental investments, the schemes have contributed to a notable increase in domestic production and exports.
The government’s latest initiative aims to further strengthen the domestic manufacturing ecosystem by providing greater market access to PLI beneficiaries through public procurement. By simplifying the supplier classification and reducing local content requirements, the government hopes to encourage more companies to participate in the PLI schemes and contribute to India’s economic growth.
